Anticipating Economic Recovery · Source: Macrobond, UOB Private Bank Note: Sample of 41 economies/regions Shaded regions denote OECD recessions. 11 Beijing Air Quality Index (Lunar

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2CONNECT - COLLABORATE - INNOVATE

Anticipating Economic Recovery Beyond COVID-19!Francis Tan, Investment Strategist, UOB Private Bank4th June 2020

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Disclaimer

GeneralThis document contains material based on publicly-available information. Although every reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this document, United Overseas Bank Limited (“UOB”) makes no representation or warranty as to, neither has it independently verified, the accuracy or completeness of such information (including any valuations mentioned). UOB neither represents nor warrants that this document is sufficient, complete or appropriate for any particular purpose. Any opinions or predictions reflect the writer’s views as at the date of this document and may be subject to change without notice.

The information contained in this document, including any data, projections and underlying assumptions, are based on certain assumptions, management forecasts and analysis of known information and reflects prevailing conditions as of the date of publication, all of which are subject to change at any time without notice. Past performance figures are not indicative of future results.

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• Global • China

China is a case of “first-in, first-out”Our COVID-19 vs SARs Experience

COVID - 19 SARS

Day 86

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

5327

84597

1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 129

COVID - 19, lhs SARS, rhs

Source: Macrobond, UOB Private Bank

million

Day 96

0

1

2

3

4

5

6

7

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

8437

6.19 million

1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 129

COVID - 19, lhs SARS, rhs


Asymptote Asymptote

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COVID-19 Situation In ASEAN

Malaysia

Number

0

1000

2000

3000

4000

5000

6000

7000

8000

7857

February March April May

2020

COVID - 19 - Malaysia (Confirmed)


Singapore

Number

0

5000

10000

15000

20000

25000

30000

35000

40000

35292


2020

COVID - 19 - Singapore (Confirmed)


Indonesia

Number

0

5000

10000

15000

20000

25000

30000

26940

8 15 22 1 8 15 22 1 8 15 22 1

2020 Mar 2020 Apr 2020 May

COVID - 19 - Indonesia (Confirmed)


Philippines

Number

0

2500

5000

7500

10000

12500

15000

17500

20000

18638

1 8 15 22 1 8 15 22 1 8 15 22 1 8 15 22 1

2020 Feb 2020 Mar 2020 Apr 2020 May

COVID - 19 - Philippines (Confirmed)


Thailand

Number

0

500

1000

1500

2000

2500

3000

3500

3083


2020

COVID - 19 - Thailand (Confirmed)


Cambodia

Number

0

10

20

30

40

50

60

70

80

90

100

110

120

130

125


2020

COVID - 19 - Cambodia (Confirmed)


Slowing

Slowing Slowing

SlowingExponential

Exponential

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But will relax from lockdowns in phasesMost Countries Experiencing Slowdown

• Top 13 COVID-19 Infected EconomiesNumber, million

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

United States: 1.78 million

Russia: 0.42 million

United Kingdom: 0.28 million

Spain: 0.24 million

Italy: 0.23 million

Brazil: 0.51 million

Germany: 0.18 million

Turkey: 0.16 million

France: 0.15 million

Iran: 0.15 million

India: 0.20 million

Peru: 0.16 million

0.09 million

1.00 million

21 26 31 5 10 15 20 25 1 6 11 16 21 26 31 5 10 15 20 25 30 5 10 15 20 25 30 4

2020 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May

Canada Peru India China Iran France Turkey Germany Brazil Italy Spain United Kingdom Russia United States


China

Explosion

Brazil/Russia/India cases exploding too

7

Percent from Baseline (1wma)

- 80

- 70

- 60

- 50

- 40

- 30

- 20

- 10

0

10

20

Singapore: - 60.9

Malaysia: - 38.6

Philippines: - 53.0

Vietnam: 11.9

Taiwan: 2.3

Hong Kong: - 8.7

Thailand: - 19.3

Japan: - 20.0

South Korea: - 2.6

0.0

1 11 21 31 10 20 30 10 20

2020 Mar 2020 Apr 2020 May


• Asia • Europe

Gleaning from Community Mobility DatasetsAsian Economies Are Opening Up Faster

Percent from Baseline (1wma)

- 80

- 70

- 60

- 50

- 40

- 30

- 20

- 10

0

10

Germany: - 31.7

United Kingdom: - 55.6

France: - 40.3

Italy: - 30.6

Spain: - 41.7

Denmark: - 29.4

Finland: - 32.6

Sweden: - 31.1

0

1 11 21 31 10 20 30 10 20

2020 Mar 2020 Apr 2020 May


20 days

MCO 18 Mar

CB 7 Apr

8

How Quickly The World Changed

Little ImpactClose to recessionRecession

Feb 2020

Apr 2020

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Real GDP growth, annualized % change

Forecast Month 1Q 2020 2Q 2020 3Q 2020 4Q 2020 2019 2020

GlobalJanuary 2.7 2.9 2.7 2.6 2.5 2.6March 0.7 1.6 3.5 2.8 2.4 1.9April -10.9 -22.1 19.9 4.5 2.4 -4.2

USJanuary 1.5 2.2 1.5 1.2 2.3 1.8March 1.1 -0.4 1.7 2.4 2.3 1.3April -8 -30.2 16.7 1.1 2.3 -5.8

ChinaJanuary 7.2 6.6 5.5 5.8 6.1 6.2March -0.9 5.1 11.4 5.8 6.1 4.4April -29 10.3 27.7 12.1 6.1 -1

BrazilJanuary 2 2.4 2.5 2.6 1.1 2.2March 1.3 2 2.5 2.6 1.1 2April -8.8 -24.3 0.4 7 1.1 -6

UKJanuary 1.2 1.1 1.1 1.1 1.3 1March 0.6 0.5 1.2 1.1 1.4 0.7April -3.1 -36.7 25.8 5.8 1.4 -5.7

Euro AreaJanuary 1.4 1.5 1.8 1.4 1.2 1.3March 0.7 0.8 1.2 1.3 1.2 0.8April -14.8 -40 59.3 1.6 1.2 -7

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But when it gets this worse, be prepared for a strong revivalGlobal Manufacturing Recession

• Global Manufacturing PMI Market Breadth%

0

10

20

30

40

50

60

70

80

90

100

2.5

50.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mfg PMI Breath


Note: Sample of 41 economies/regions

Shaded regions denote OECD recessions

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Beijing Air Quality

Index (Lunar New Year)

Lunar New Year

25

50

75

100

125

150

175

200

225

79.6

110.5

58.7

120.2

92.1

82.4

100.0

- 100 - 86 - 72 - 58 - 44 - 30 - 16 - 2 12 26 40 54 68 82 96

2020 2019 2018 2017 2016 2015


Vehicle Sales & Registration

Number (Weekly)

Lunar New Year

0

25000

50000

75000

100000

125000

150000

48529

41267

Jan Apr Jul Oct Jan Apr

2019 2020

Retail Sales, Passenger Cars Wholesale, Passenger Cars


China Energy Price Index

Index (1/1/2020 = 100)

87.5

90.0

92.5

95.0

97.5

100.0

102.5

96.2

95.5

January February March April May

2020

Metallurgical Coke, Domestic Composite Price, Index

Coal, Bohai - Rim Steam Coal, CNY


Not just Manufacturing recovery, but Consumption tooNormalisation in Chinese Consumption

Total Residential Real Estate

Transactions (18 cities)

Units (1wma)

Lunar New Year

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2956

3557

2539

- 69 - 59 - 49 - 39 - 29 - 19 - 9 1 11 21 31 41 51 61 71

2020 2019 2018


China Excavators Production &

Domestic Sales (SA)

Number (seasonally adj)

02/2020 6562

0

5000

10000

15000

20000

25000

30000

35000

31897

27465

2008 2010 2012 2014 2016 2018 2020

Excavators Domestic Sales (Major Manufacturers)

Excavators Industrial Production


China Metals Prices

Index

25/03/2020 90

23/03/2020 74.5

70

75

80

85

90

95

100

105

110

115

112.0

91.5

100.0

1 10 21 30 10 19 28 10 19 30 8 17 28 7 18 27 5

2020 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May

Domestic Copper Price Iron Ore Price(Tianjin Port)


Indu

stry

Con

sum

er

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Hermes store in China hauls in S$3.8m a day after reopeningRevenge spending?

The figure is believed to be the highest daily haul for a single luxury boutique in China.

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Pandemic will push forward even higher demand for automationNot just in manufacturing, but consumer goods/services cars, 5G, connectivity, virtual offices, etc

Robots Will Be More Prevalent In Our Lives

Number

0

50000

100000

150000

200000

250000

300000

Africa: 800

Brazil: 1200

Canada: 6500

China: 290000

Germany: 26000

Spain: 6500

France: 6500

United Kingdom: 2600

India: 7500

Italy: 10500

Japan: 64000

Mexico: 9000

United States: 46000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

United States Mexico Japan Italy India United Kingdom France Spain Germany China Canada Brazil Africa


• Annual Supply of Industrial Robots

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Demand beyond your dreams as corporates invest heavily for a pandemic-norm world shifting from workplaces to homes.

Confident in World Semiconductor Sales

• World Semiconductor Sales% y/y

08/2017 23.9

03/2010 59.7

06/2004 40.5

08/2000 51.8

05/1995 46.4

05/1984 152

03/1988 42.6

09/1986 39.1

03/1991 15.7

03/1980 70.2

09/1985 - 26.2

09/2001 - 44.7

03/2009 - 30.4

02/2012 - 7.09

05/2016 - 7.33

07/1998 - 16.9

04/1990 - 5.49

08/1996 - 18.7

09/1981 - 10.6

06/2019 - 16.4

- 50

- 25

0

25

50

75

100

125

150

175

6.13

0.00

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

World Semiconductor Sales (3mma)


Higher average

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Highly automated electronics cluster continues production; while higher demand will be sustained in future as investment shifts.

Semiconductor IP Already Expanding

• Semiconductor Industrial Production% y/y

North America, Semiconductor Equipment, Billings, 3 Month Moving Average, USD

South Korea, Industrial Production, Production, By Industry, Manufacturing, Electronic Components, C omputer, Radio, Televisio n & Communication Equipme nt & Apparatuses, Se …

China, Industrial Production, By Products, Electrical Equipment, Integrated Circuit

Malaysia, Manufacturing, Volume, Integrated Circuits

Taiwan, Industrial Production, Production, By Product, Integrated Circuits Packaging, TWD

Japan, Industrial Production, Production, Manufacturing, Electronic Parts & Devices, Integrated Circ uits, Index

Singapore, Manufacturing, Electronic Products, Semiconductors, Index

- 50

- 25

0

25

50

75

100

Singapore: - 7.89

Japan: 2.50

Taiwan: 10.27

Malaysia: 21.12

China: 56.03

South Korea: 44.86

United States: 17.68

2014 2015 2016 2017 2018 2019 2020


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The pandemic sell down of Semicon stocks was overdone. As sales are expected to be stronger, so will stock prices.

Higher Semiconductor Stock Prices

• Semiconductor Sales & Stock Market%

09/2013

09/2003

03/2010

02/2011

12/2019

02/2015

04/2006 07/2007

02/2017

Japan, Torex Semiconductor Ord Shs, Total Return, JPY

Japan, Mimasu Semiconductor Industry Ord Shs, Total Return, JPY

North & South America, Semiconductor Sales, Total, 3 Month Moving Average, USD

Japan, Domestic Trade, Semiconductor Sales, Total, 3 Month Moving Average, USD

Europe, Semiconductor Sales, Total, 3 Month Moving Average, USD

"Asia Pacific ex China, Semiconductor Sales"+"China, Domestic Trade, Semiconductor Sales", Total, US D

United States, Equity Indices, Dow Jones, ICB Sector, Semiconductors, Index, Total Return, Close, US D

United States, Equity Indices, S&P, Small Cap 600, Semiconductors & Semiconductor Equipment, Index, Total Return, …

United States, Equity Indices, S&P, Small Cap 600, Semiconductor Equipment, Index, Total Return, USD

United States, Equity Indices, S&P, 500, Semiconductors & Semiconductor Equipment, Index, Total Retu rn, USD

United States, Equity Indices, S&P, 500, Semiconductors, Index, Total Return, USD

United States, Equity Indices, S&P, Composite 1500, Semiconductors & Semiconductor Equipment, Index, Total Retur …

United States, Equity Indices, S&P, 1000, Semiconductors & Semiconductor Equipment, Index, Total Ret urn, USD

United States, Equity Indices, S&P, 1000, Semiconductor Equipment, Index, Total Return, USD

Emerging Markets, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, I ndex, Tota …

AC World, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, Index, To tal Return, …

Europe, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, Index (Indu stry), Total …

EMU, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, Index (Industr y), Total R …

EMU, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, Index (Industr y), Total R …

AC World, Equity Indices, MSCI, Mid & Large Cap, Semiconductors & Semiconductor Equipment, Index (In dustry), Tot …

- 75

- 50

- 25

0

25

50

75

100

125

46.55

53.49

53.27

53.27

46.29

37.60

46.83

37.72

48.36

48.58

49.43

28.62

32.71

48.78

24.40

53.82

8.38

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


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• Fed’s Interest Rate (Dot Plot) • DM & EM Policy Rates

Supporting investment and consumptionLow Interest Environment To Remain

%

24/12/2020 0.031

24/01/2023 0.035

28/12/2022 2.1

- 0.5

0.0

0.5

1.0

1.5

2.0

2.5

0.0

2016 2017 2018 2019 2020 2021 2022 2023

OIS Futures Curve FFR (mid) Median


Percent Percent

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0.11

4.06

2006 2008 2010 2012 2014 2016 2018 2020

EM Policy Rate, lhs DM Policy Rate, rhs


18

• Fed’s Balance Sheet & Ted Spread • S&P 500 Sector Performance

Eased credit and liquidity fears in the marketMassive Liquidity Injection By Fed

Index (01/01/2020)

30

40

50

60

70

80

90

100

110

120

Energy: 66.7

Materials: 92.4

Industrials: 84.2

Con Disc: 103.2

Con Stap: 94.4

Healthcare: 100.4

Financials: 77.3

Infotech: 107.7

Comm Svcs: 100.9

Utilities: 93.5

Real Estate: 91.6

100.0

Jan Feb Mar Apr May

2020


USD, trillion Percent

28/02/2020 4.16 trillion

0

1

2

3

4

5

6

7

8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0.18

7.1 trillion

2008 2010 2012 2014 2016 2018 2020

Balance Sheet & Flows of MFI Sector, Federal Reserve Banks, Assets, Tot …

TED Rate, Spread, rhs


Lagg

ards

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Unloved, Laggard Sectors Are Gaining

Leading & ImprovingLagging but Improving

Lagging and Weakening Leading but Weakening

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The LIGHT at the end of the tunnel is the GOALS of the

Semiconductor Industry

It is only the tunnel that is temporary

Francis Tan

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Francis TanInvestment Strategist, First Vice PresidentInvestment Products and SolutionsUnited Overseas Bank (UOB) Private Bank

Francis is an Investment Strategist with UOB Private Bank. Before this, he was an economist with UOB’s Global Economics and Markets Research team, where he was responsible for ASEAN economics. Francis also provides regular economic commentaries in English and Mandarin through local and international print and broadcast media.

Before joining UOB, Francis held roles in Asian and global financial institutions as an investment strategist and an investment manager. His career also included stints as an economist at the Singapore Ministry of Trade and Industry and the Singapore Tourism Board, where he specialisedin Tourism Economics.

Francis holds a Bachelor of Social Science (Honours) in Economics and a Master of Social Science in Applied Economics from the National University of Singapore. Continuing his academic interests in the field of applied economics, Francis also contributed a chapter titled "Tourism Demand in Singapore: Estimating Neighbourhood Effects" in the Handbook of Tourism Economics (2013) and published a paper titled “Growth and Environmental Quality in Singapore: Is There Any Trade-off?” in the Ecological Indicators journal (2014).

Documents

Anticipating Economic Recovery · Source: Macrobond, UOB Private Bank Note: Sample of 41 economies/regions Shaded regions denote OECD recessions. 11 Beijing Air Quality Index (Lunar